PowerStream a good move for Barrie: Mayor

BARRIE - Bigger has proven to be better for Barrie.
In the last round of provincial energy-sector restructuring, Barrie took a risk: its growing, dividend-generating Barrie Hydro merged with a much-bigger utility, PowerStream.
It wasn't an idea that many citizens and even the Barrie Hydro board liked in 2008, but the last four years have shown savings and dividends, with a new saving coming next week, said Barrie Mayor Jeff Lehman.
"We have just received the final decision from the Ontario Energy Board and Barrie customers are going to see their distribution rates DROP again (that's the part of the bill that PowerStream controls). It will be a significant drop in people's monthly bills. We won't know exactly how much until the rate order is issued, which will be next week," said Lehman.
"The drop in rates that we will hear about next week is on top of the roughly 15 per cent that the distribution charge has already dropped as a result of the merger, from $28 to $24 per month. Unfortunately, with the huge increases in the provincially-regulated price of power, this decrease has been swallowed up and more by the increased prices. But it would have gone up even more if it wasn't for the PowerStream savings."
The 2008 business case concluded the two utilities would be better off as one, because of economies of scale yielding $5 million a year in savings.
"There are economies of scale in the power distribution business, everything from having a single control room and single management team, to fleet and materials purchases," said Lehman, who was a first-term councillor during the contentious debate.
"These were the reasons that council decided at the time that the merger would be good not only for the city's bottom line but for our residents as well."
The gamble – which was more in governance, as the city would have only three seats on PowerStream's 13-member board (which gave Vaughan six and Markham four) – paid off in dividends, the mayor added.
"Regular annual dividends have been paid, although recently the city has been reinvesting these in PowerStream's solar business, which is also now doing very well and is beginning to generate significant revenues. And of course, it was the special dividend of $25.7M that Barrie received after the merger that funded roughly half of the city's commitment to the Royal Victoria Hospital and the (Simcoe Muskoka Regional) Cancer Care Centre," said Lehman.
Ontario has tried to upgrade the energy sector a few times.
Just recently, an Ontario government panel on the future of the province's electricity sector is recommending further mergers, to whittle the province's 80 local distribution companies into eight to 12 regional companies.
The Liberal government encouraged mergers with a tax holiday in 2008 . The PowerStream deal was struck within days of the Oct. 17 , 2008 deadline and became effective Jan. 1, 2009.

Under the Progressive Conservative regime that lasted from 1995 to 2003, smaller companies were encouraged to merge and create for-profit companies.
The former Barrie Hydro was itself the product of several smaller municipal utilities. In 1999, Barrie retained ownership of the assets of the Barrie Public Utilities Commission, as as provincial restructuring of the energy sector occurred, city council created Barrie Hydro Holdings in late 2000.
Throughout the next decade, Barrie Hydro acquired several other smaller SImcoe County utilities and became the 11th largest municipally owned local distribution company.